JobKeeper 2.0 welcomed by small business advocates

- July 22, 2020 4 MIN READ

Small business advocates have welcomed the government’s announcement of the extension of the JobKeeper scheme.

Small business owners and their champions have met the announcement of JobKeeper 2.0 with appreciation, suggesting the revamped and extended scheme will allow small businesses to remain viable during the ongoing coronavirus crisis.

“We know the vital role small to medium businesses play within the Australian economy and we are delighted the Federal Government recognised this by extending JobKeeper for those who have been hardest hit, said Peter Langham, CEO Scottish Pacific.

Langham said Scottish Pacific has been working with small business owners for over 30 years  and know how tough it is.

“The extension of JobKeeper gives these business owners more time to get their finances set up correctly – I’d suggest they use this time to ensure their business can succeed in the future, and to get their family home out of the business funding equation.

“Whether your JobKeeper assistance runs out in September or March, my advice is don’t leave it until then to organise funding that will protect your cash flow and ensure that you’ve got the best chance of making it through this difficult time,” Langham said.

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell says small businesses are breathing a sigh of relief following the federal government announcement extending JobKeeper by six months.

“Thousands of small business owners across Australia will be sleeping better, knowing JobKeeperwill be maintained in its current form until the end of September,” Carnell said.

“Small businesses will be comforted most by the Prime Minister’s remarks that the federal government will continue to support small businesses who need it for the duration of this crisis.

“It’s generous support for small businesses, who can now plan ahead for at least the next six months,” Carnell said.

Langahm suggested it’s time for business owners to also explore their options outside of government support.

“Many businesses have assets within the business, such as invoices, plant and equipment and stock, that can be used as security to fund the business. The thing is many business owners are unaware there are funders like ScotPac, who are keen to provide business finance using these assets, rather than the family home,” he said.

Chartered Accountants Australia and New Zealand (CA ANZ) Tax Leader Michael Croker suggested many businesses have already made difficult financial decisions assuming the existing JobKeeper package will finish in September

“Now they need to re-assess their continued eligibility using real-time turnover data after 27 September.

“Employers will need to trawl through staff records and apply a 20 work hours test which ‘looks back’ to February 2020, and communicate which employees get the full JobKeeper rate and who gets the lesser amount.

“The behavioural response from both employers and employees to this two-tier JobKeeper regime will be watched with interest,” said Croker.

Elinor Kasapidis, CPA Australia’s tax policy adviser says, the Government’s approach to tapering JobKeeper payments will be well received by many and is what CPA had suggested to enable affected businesses to adjust in an orderly way.

“The advance notice is welcomed as many businesses will require professional advice to determine the best course of action and what they might need to do to requalify.

“The orderly withdrawal of JobKeeper also gives many businesses extra time to reboot and permanently change the way they operate, just as consumers have changed how and when they buy goods and services,” Kasapidis said.

“This extension of JobKeeper and the IR flexibility that comes with it, will give small business owners a sense of certainty to move forward and make smart employment decisions into 2021,” said Employsure Managing Director Ed Mallett.

“Our main advice to business owners right now is to fully understand the details of the amended scheme, its potential repercussions and to get professional advice on how to implement it across their business.

“Even more importantly, employers shouldn’t use it as a reason to bury their heads in the sand. Subsidy shouldn’t be confused for sustainability, and if you need to make hard decisions about the viability of your business, don’t delay the inevitable,” Mallet said.

JobKeeper has been a lifeline for small business, with MYOB’s recent Business Monitor research showing 84 per cent of small business owners that were eligible for the program reported the subsidy allowed them to continue trading.

“As we struggle to contain the spread of the virus, the negative economic impact continues to hurt our small businesses,” says MYOB CEO Greg Ellis.

“We are still seeing impact for our customers across all sectors, most markedly in the decline in invoices issued versus a pre-COVID baseline. Last week, the number of invoices created was down 25 per cent on average across all industries, the hardest hit being arts and recreation (-34 pere cent), healthcare and social assistance (-33 per cent) and admin and support services (-32 per cent).

“The extension of JobKeeper, and the sensible renewed eligibility test, will ensure small business owners have the best possible chance of success, and even more importantly will provide continued employment for many thousands of Australians.”.

JobKeeper 2.0 will support small businesses from the end of September through until 28 March 2021. From October to December the payment will reduce to a fortnightly rate of $1200 per full-time employee and $750 for employees working 20 hours or less per week. From January until March that payment will reduce again to $1000 for full-time workers and $650 for part-timers.

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